With more than 19,000 advisors of various stripes on staff,
Speaking at BancAnalysts Association of Boston Conference in Boston on Thursday, Lindsay Hans, the president and co-head of Merrill Wealth Management, made it clear that's not enough.
"We need more advisors," said Hans, who began sharing the co-head mantle with Eric Schimpf following
Aside from their vast stable of advisors, Merrill and Bank of America oversee one of the industry's most ambitious training programs. Hans said the firms have roughly 2,500 new recruits now working to learn the ins and outs of the wealth management business.
As recently as the '90s, Hans said, such novices would have been placed in front of a telephone and told to start calling strangers to find people who need help investing money. But these sink-or-swim tactics don't work anymore.
For one, Hans said, "not many of us have a hard line at home. And not many of us take a phone call from somebody that we don't know." New regulations, she said, have further complicated matters.
Merrill's latest training plan calls for starting newcomers off in its preferred banking division, which works with clients who have more money than the typical retail client but don't hit the $250,000 threshold for the firm's wealth management division. Roughly 2,500 trainees are now enrolled in a program that furnishes them right off with client leads and gives them access to the breadth of wealth management services the firm has to offer.
"And then they work their way into the Merrill branch," Hans said. "We've extended that runway longer. "
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Years ago, well before Merrill's acquisition by Bank of America in 2008, a common refrain in the industry was that "Merrill Lynch trains the Street" — meaning Wall Street. Phil Waxelbaum, the founder and CEO of the recruiting firm Masada Consulting, said Merrill has a long way to go to reclaim that reputation.
Waxelbaum said it's no secret the dropout rate is high for newcomers to the industry. There's no evidence, he said, that Merrill is any better in this regard than anyone else.
"The one place where Merrill has historically had great success relative to the rest of the Street, Merrill was the better trainer. Merrill had the better trainees," Waxelbaum said. "And that has not been true since, probably, 1990. And I doubt we'll ever reach it again."
Merrill's latest training program is still fairly new — it didn't start accepting enrollees until late 2020. That makes it hard to gauge how many of its graduates are in it for the long haul.
But as virtually everyone in the industry acknowledges, there
Hans said Merrill is starting to recruit again. Attempts to lure select advisory teams, she said, are "something we had turned off, but we're turning back on for the right markets."
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Merrill itself has been on the receiving end of a fair number of recruiting raids. In September, for instance, UBS Group announced it had picked up
Hans and other executives in Boston on Thursday acknowledged that the retention of existing advisors and organic growth will have to play a big part in the firm's ambitions. Despite advisory teams' recent departures, Merrill and Bank of America managed to increase the number of households they're managing by
Bank of America's offerings range from its private bank — which works with clients with $3 million or more and offers services like trust and estate planning — to its Merrill Edge product, which lets customers open their own brokerage accounts and invest the money how they choose.
Hans said roughly 10,000 advisors in Merrill itself specialize in dealing with clients whose financial situation is complex enough that they "need a human being to deliver financial advice to them." Hans said the firm's roughly 600 offices throughout the U.S. mean its representatives can meet in person with wealthy business owners and entrepreneurs in places as removed from Wall Street as Boise, Idaho.
Jeff Busconi — who oversees Bank of America's private bank as head of wealth management strategy, products and services — said about 80% of the accounts the firm opens in a given year are from existing clients.
"So think about this wealth transfer that we all read about. It's happening," he said. "As family trees grow, we're capturing those additional family members, those additional assets, those new accounts."
Hans said about half of Merrill's clients do their banking through Bank of America and about half do not.
"So that's another big growth opportunity for us as well," she said.
But with attempts to bring new blood into the industry still iffy prospects, perhaps the only sure way for firms to win the wealth management game is to hold onto the strong advisory teams they already have. Their ability to do that often comes down to compensation.
Merrill announced earlier this month that it was eliminating an unpopular pay grid policy that some had criticized as pushing advisors to add accounts at the expense of spending time with existing clients. As first reported by AdvisorHub, the new system offers rewards to advisors who attract three client households with more than $500,000 each and increase their existing clients' assets and liabilities by 7.5%. The new grid also reduces penalties formerly imposed on advisors who see year-over-year declines in their assets under management.
Waxelbaum said that when it comes to making the most of what you already have, the real trendsetter has been Morgan Stanley. Waxelbaum credited Morgan Stanley CEO James Gorman for finding a way to not only retain wealthy clients' assets but also, through the use of technology and other investments, enable financial planners to be more efficient managing that money.
"It's pretty damned easy now," Waxelbam said. "You take Jim Gorman's playbook."
